The Administrative Appeals Office (AAO) administers AADR. However, AADR is not the only option for taxpayers and return preparers who wish to appeal an audit assessment. This section provides general information about filing an appeal with the Board of Review (BOR) and Tax Appeal Court (TAC). If you are thinking about filing an appeal, discuss your case with a trusted tax advisor and the auditor or examiner to see which option works best for you.
Pre-Assessment Appeals (Proposed Assessments)
A taxpayer that disagrees with a Proposed Notice of Assessment (proposed assessment) issued as a result of a DOTAX audit may appeal to AAO, but not to the BOR or TAC. If the case is unresolved or not accepted by AAO, DOTAX will issue a Final Notice of Assessment (final assessment). A taxpayer may appeal a final assessment to either the BOR or TAC (section 235-114, Hawaii Revised Statutes (HRS)).
Post-Assessment Appeals (Final Assessments)
A taxpayer that disagrees with a Final Notice of Assessment issued as a result of a DOTAX audit may appeal to the AAO, BOR, or TAC. Alternatively, a taxpayer may file multiple appeals as discussed below.
AAO and BOR.
A taxpayer may appeal to both AAO and BOR. However, if AAO accepts the case, the taxpayer must choose either AAO or BOR to hear its case. If the taxpayer chooses AAO, the taxpayer must withdraw its appeal from the BOR and vice versa.
AAO and TAC.
A taxpayer may appeal to both AAO and TAC. If AAO accepts the case, the taxpayer must obtain permission from the Director of Taxation and TAC to participate in AADR. A taxpayer does not have to withdraw its appeal from TAC to participate in AADR.
Post-AADR appeal options.
If AAO does not resolve the case, then the taxpayer may proceed with an existing TAC appeal as described above or if no TAC appeal exists, the taxpayer may pay the disputed portion of the final assessment under written protest and seek to recover the taxes by filing an action in TAC within 30 calendar days from date of payment (section 40-35, HRS).
Other Types of Appeals (Return Preparer Penalty Assessment)
A return preparer that disagrees with a Notice and Demand of Penalty (return preparer penalty assessment) may appeal to AAO and/or TAC, but not the BOR. If the return preparer appeals to both AAO and TAC and AAO accept the case, then the return preparer must obtain permission from the Director of Taxation and TAC to participate in AADR. A return preparer does not have to withdraw its appeal from TAC to participate in AADR. If AAO does not resolve the case, then the return preparer may proceed with its appeal before TAC.
The deadline to apply to the Administrative Appeals and Dispute Resolution (AADR) program depends on whether you are appealing a proposed, final, or a preparer penalty assessment. If you are appealing a proposed assessment, the deadline to apply is 20 calendar days after the mailing date of the proposed assessment. If you are appealing a final or preparer penalty assessment, the deadline to apply is 30 calendar days after the mailing date of the assessment. See the AADR Deadline Calculator for more information.
BOR and TAC.
Applying or participating in AADR does not toll the statute of limitations for filing an appeal with the BOR or TAC. The deadline to appeal a final assessment to the BOR or TAC is 30 calendar days after the final assessment mailing date (section 235-114, HRS). If a taxpayer is paying under written protest (section 40-35, HRS), then an action to recovery the with the TAC within 30 calendar days from date of payment.
Page Last Updated: February, 14, 2017